The Parliament of the European Union gave its official blessing to the Market in Cryptoassets (MiCA) – a regulatory framework that could set clear standards in the industry.
The approval comes approximately five months after the infamous FTX collapse and aims to protect investors from such failures.
‘Stringent Rules are Very Much Needed’
The EU Parliament voted 517-38 in favor of the new cryptocurrency licensing policy – MiCA. It also supported a separate law requiring digital asset operators to identify their clients about any transfer of their funds to prevent money laundering.
The so-called “travel rule,” which has been used in traditional finance, will cover cryptocurrency transactions, providing customers with information about the source of the assets and the beneficiary. It will also apply to transfers worth above €1,000 (around $1,100) from crypto wallet addresses to private users. It will not cover person-to-person transactions.
Mairead McGuinness – the European Commissioner for Financial Stability, Financial Services, and the Capital Markets Union – praised the MiCA legislation as the world’s “first comprehensive crypto rules.” She said such standards are vital due to the multiple crashes and scandals that shuttered the industry last year:
“We are putting safeguards in place that would prevent companies active on the EU market from engaging in some of the practices that led certain cryptoasset operators to collapse. As we have seen in recent months, stringent rules and supervision are very much needed because we’ve had the collapse of projects such as FTX, Terra Luna, Celsius, and Voyager.”
The legislation on stablecoins is expected to come into effect from July 2024, whilst the broader rules on crypto providers should become live from January 2025.
CZ Praises the New Rules
Numerous industry leaders have alerted in the past several months that imposing appropriate supervision on the cryptocurrency sector is a must. In a recent tweet, Changpeng Zhao – CEO of Binance, better known as CZ – highlighted the EU’s move, arguing it gives more protection to consumers and fosters innovation of the asset class.
The European Parliament voted for MiCA to be implemented.
This means one of the world’s largest markets is introducing tailored regulations for crypto to protect users and support innovation.
The fine details will matter, but overall we think this is a pragmatic solution to…
— CZ 🔶 Binance (@cz_binance) April 20, 2023
Brian Armstrong – CEO of Coinbase – recently urged the American authorities to apply rules on the industry as otherwise, the nation might witness an outflow of companies and talent. He went further, hinting that his exchange could relocate should the situation remains unchanged.